A Year of Hijacking of Budgets by the Elite, Bypassing Public Welfare
19
targeted —is clearly not enough. That is particularly so in light of an international
agreement that requires countries to spend a minimum of 4 of education budgets to combat illiteracy.
Community Welfare in Regions under Threat
A. Fiscal Transfers to Regions not yet Capable of Enhancing People’s Welfare
The purpose of regional autonomy is to improve people’s welfare by having local
governments —which are closest to the people—deliver public services. But, after a
decade of such autonomy, outcomes are way below expectations. Although the legal framework for regional autonomy has been revised twice, fiscal imbalances among
regions continue to be very marked.
It is
also undeniable that political
elite interference
in regional fiscal transfers has
contributed to problems the transfer system is
currently experiencing. Current policy on regional
fiscal
transfers is
increasing per
capita fiscal gaps among regions.
FITRA’s research has revealed that in 2010 the
area receiving the largest per capita transfer of funds
from the central government Tana Tidung Kabupaten District was allocated 127 times more funding than the area receiving the smallest allocation Bogor
Kabupaten. This sort of thing is happening
because the principle that “money follows functions” is not being properly implemented. Another contributing factor has
been a lack of effective coordination between policies on sub-national government
— the domain of the Minister of Home Affairs
— and polices on distribution of funds to regions
—the bailiwick of the Minister of Finance. One result of this lack of coordination is that, although 70 of government functions have been decentralized
to regions, regions have been receiving just 31-34 of State spending power in the form of fiscal transfers to regions.
The current formula for calculating General Allocation Fund DAU allocations encourages regions to waste money on bureaucracies and to split up to form new
autonomous regions.
An examination of regional budgets APBDs for 2011 shows that 297 kabupatenscities
—more than half of Indonesia’s sub-national governments
—spent more than 50 of their entire budgets on civil service costs. Thus the DAU which is actually meant to equip regions with funds to spend on
delivery of public services is being used up for civil service costs. This is because the “basic funding allocation” in the current DAU formula is for civil service costs,
including those resulting from the establishment of new autonomous regions.
Kab. Bogor = Rp .35 m
5 10
15 20
25 30
Per ca
p it
a F
is ca
l Tr
an sf
er s
m illi
o n
s
Per Capita Fiscal Transfers of Kabupatnes Cities 2010
Kab. Tana Tidung = Rp 44.5 m.
20 A Year of Hijacking of Budgets by the Elite, Bypassing Public Welfare
Regions are also unfailingly receiving less overall DAU funding than they are legally entitled to because a number of factors are drawing down the level of funds destined
for the DAU. Thus, in 2011 sub-national governments received Rp 52.2 trillion less in DAU funding than they should have.
The Special Allocation Fund DAK is moving further and further away from its original charter:
The DAK’s raison d’être is to provide local funding for specific activities undertaken in support of national priorities. In 2005 seven fields of activity
received DAK funding. By 2011 the number had jumped to nineteen. DAK funding
is based on a complex formula; its guidelines are often published late; and its technical criteria are subject to frequent change. All of this makes the DAK
susceptible to political manipulation and reduces its impact.
B. Troubled Budgeting in Regions
